 QuickBooks Online 2024. New vendors set up and accounts payable beginning balances. Get ready and clear your mind because we don't overanalyze. We intuit with intuits. QuickBooks Online 2024. First a word from our sponsor. Yeah actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but but that's okay whatever because our merchandise is is better than their stupid stuff anyways. Like our trust me I'm an accountant product line. Yeah it's paramount that you let people know that you're an accountant because apparently we're among the only ones equipped with the number crunching skills to answer society's current deep complex and nuanced questions. If you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Here we are in our Get Great Guitars 2024. QuickBooks Online sample company file we set up in a prior presentation continuing to lay down those foundational items necessary to do the normal data input process the normal data input process consisting in part of entering financial transactions with the help and use of forms found in the new or plus button broken out by cycle customer cycle or sale cycle vendor cycle expense cycle employees cycle or payroll cycle we then communicate with our customers vendors and employees with the help of the centers on the left sales center or customer center expenses center or vendor center payroll center or employee center when we set up those foundational items the one time things that are not as cyclical they're often found in the cog button we've looked at the your company the lists we're basically continuing on with the lists in this case looking at the chart of accounts which can also be found under the transactions chart of accounts on the right and we're also now adding the beginning balances to the chart of accounts this time looking at the accounts payable beginning balances which also could include the sub ledger or list of the vendors the people that we pay for stuff the people that we have to populate the forms with the expense form check form bill form possibly the purchase order if we're using that form if we go on to our worksheet over here we are continuing on to imagine that we had a prior accounting system and we want to move into the new accounting system in quickbooks online we want to pull in our beginning balances as of the end of the last year we used the prior accounting system in our case 1231 2023 so that we have everything set up going forward for January of 2024 moving forward notice that we don't have any income statement accounts you will not typically if you're using this method and you're transferring over into the whole new current year because the income statement rolls out into the balance sheet so we have a balance sheet that reconciles in basically journal entry type of format here but we cannot just enter it as a journal entry because each account as we've discussed has its own special needs we started out with the inventory possibly the most difficult account because it has a sub ledger that we have to track it's difficult at least if we're tracking that sub ledger in quickbooks so that we can add the inventory items we then talked about the accounts receivable which is also a little bit more difficult than just entering the balance of 20,500 because we need to know who we owe the 20,502 number one and number two we need to be able to pay or collect on the 20,500 tying out the received payment to the open invoices and if we had a journal entry we wouldn't be able to do that accounts payable is what we're going to do now because it's probably the next area of difficulty and because it's very similar to the accounts receivable when we look at the accounts payable I have to then think well can I just enter that as a journal entry that we owe people payables the 15,000 no I can't do that why because one the 15,000 might be consisting of multiple different vendors so I need to know who I owe the money to so I can track who I owe the money to and then pay them who I owe the money to and two then if I enter that as a journal entry when I pay off the journal entry it's not going to tie out to the bill I need it to tie out internally with the forms that are designed to be used for the vendor side of things in quickbooks the accounts payable going up with the bill type form going down with the pay bill type form those two things have to be in in essence connected so as we enter the accounts payable balance we're thinking one I need the accounts payable on the books so everything ties out on my balance sheet but two I'm also making sure that I have the vendors so I can pay them and then also we're touching in on just simply uploading our vendors into the new accounting system now note that the vendors might be an area where you really can clean things up because oftentimes you don't need all that information for every vendor most of your vendors are just people that you paid for one off things oftentimes so if you've been in business for 10 years you may have many vendors that you no longer pay anymore but they're still in your prior accounting system because you paid them 10 years ago for one particular thing or something like that well do you need to pull that person into your current system most likely not because you it's going to clog up your so this is one of the areas where you can reduce the amount of bulk possibly in your system if you're using this method the same happens to be the truth with the accounts receivable as well you probably don't want to be pulling in a bunch of customers that you know are inactive and you're not using at this point so with the payables then if I if I go over here we would go into when we enter to a payable you could add the vendors as you go typically with expense forms check forms bill forms these forms possibly going through the bank feeds that's what normally happens when you start a new company file you start paying people possibly with the bank feeds when you pay the telephone bill the utility bill the supplies bill you add the vendors as you go adding minimal amount of data just the name that you need in order to assign the proper account and to pay the vendor so so if I go down to the vendors on the left then we manage the payments of the vendors on the left and what I would call the vendor center and then we're in the vendors over here so note that if you're a small business and you're tracking vendors on a cashed-based system then you're not going to be using this field as much most likely because again you're just basically paying the vendors as the bills become due but if you're in a system where you're where you have accounts payable that you're tracking and or possibly you're buying stuff from a inventory then you might want a lot more detail about the vendors right especially if you're dealing with inventory then your vendors are similar to the accounts receivable side of things so remember when we thought about the receivables we saw that some businesses might not need a whole lot of data about their receivables because they're selling one-time transactions they might not have a lot of repeat business with particular customers but other companies might do all of their business with repeat customers and therefore they really want to make sure they have a good relationship with all of all of their customers everyone wants a good relationship with the customers but sometimes you need to build a more personal relationship of trust over a long period of time as opposed to a one-off sale and on the vendor side same kind of thing a lot of times you might just be dealing with the phone company big companies all you need to know is who to pay that's the only place you can go to get your electricity or whatnot right so it is what it is other vendors that you buy your inventory from or something like that you might want a lot more information on one so that they can ship you the inventory and just from a technical standpoint and two because you need to build trust with those particular people so you want to tie you want to have a lot more contact information in your system about them it depends on what industry that you are in but if you have accounts payable then of course you're tracking you're at least tracking the bills and you have to then track when when you're gonna owe the bills at a future point in time okay so the process is basically similar to what we saw with the receivables we could add them one at a time so it says here's keep track of who owes you there we don't have any vendors that's why we see this screen find all your vendors contacts in one place see how much you're spending by vendor keep track of money you owe each vendor so we can import vendors here we can add the vendor let's look at adding vendor just so we can see the fields so if I tap through the fields this are the fields that would be in place if we were to upload like we did with the customers in an import situation so we have the company name notice that this is all you really need that's why the asterix is here vendor display name note also that if you are using bank feeds to pull in information to the bank feeds and then adding vendors as you go it will not usually show like if you have the telephone company was called Edison right it's not going to show in the vendor display field the name it's going to be in the bank memo or bank text but you'll be able to find it and possibly copy and paste it into the proper place if you're using electronic transfer with the bank feeds and then you can add them as you go and that's the only information you really need to see who you're dealing with then you need to interpret well if I'm paying Edison what's the account that I'm paying for what what am I paying them for the telephone then you need to assign an account based on who you are paying okay we'll talk about about bank feeds more in a future presentation but we have the title or in a future section or course so we have the title first name middle name last name email so these are not required but like I say if these if this is your actual people that you are buying inventory from constantly then you're going to want this information if they're shipping you stuff then you're going to and you're shipping them stuff possibly or you're going to need the addresses notes like I say you don't need that for a lot of vendors but if you if you have vendors you're trying to accumulate a long-term relationship with having some notes in there might be a very useful tool account number routing number for payments if you're paying them in that in that format additional information you've got the taxes business ID and track for 1099 why is this useful we talked well we'll deal with 1099s a little bit but the idea with a 1099 is in the United States the government wants to make sure that everyone's obviously paying their taxes and they're trying to make the large company responsible for the reporting of the small companies kind of I would say like ratting out the small companies to make sure they're paying their taxes why would that be the case because large companies cannot fly under the radar so the government's like we know you guys made money and we're pretty comfortable you're going to pay us because you're clearly on the radar right and so in order to be in good standing we want you to be able to to manage the taxes for the people that are not on the radar meaning the the employees and the smaller businesses the sole proprietors so that means that if you are taking on a vendor that is not incorporated this is a general rules they're not a C corporation they're not an S corporation they're a sole proprietorship or a contractor of some kind a small person then you might have to issue them a 1099 or if you're hiring them you'd have to bring them on as an employee the IRS tries to pretend like those two things have a distinct line between them although there's in practice a lot of gray area so if you so then if they're if they're a contractor then you don't have to withhold like you would if they were an employee but you still may have to issue them a 1099 which should be a fairly basic process although it looks like they're trying to make that a little bit more intense to treat them more like an employee I wouldn't be surprised if they forced you to do withholdings at some point not too far in the future for contractors but we'll see what happens but that would be what that for you track it if they're not that's the general idea okay so then you and what would you need to collect you'd need to collect their social security number if they're a sole proprietor they're not going to want to give you that normally so they should have an EIN number even if they're a sole proprietor without employee ease you can tell them get an EIN number you can get it at the IRS website so you don't have to give people your social security number if not if they won't give you that you don't do business with them typically because then your head's on the chopping block for not complying with the IRS by sending them the 1099 with the information okay or you might have to do withholdings which will upset them okay so expense rates billing rates hours payment terms so these are going to be the terms which are not as important on the vendor side as the customer side because they're going to be set by the person giving you the bill as opposed to you on on our side so we're going to have to put the due date in most likely manually accounting default expense category choose account so if this is I could as I add the vendor put the default accounts in here and that's kind of pretty nice I don't think most people do it that way because what most people do is they use the bank feeds and then as they have the bank memos come through the bank feeds they assign the vendor and then they make a bank rule which will allocate to the proper account or if you're if you're entering the transactions with an expense form or bill form or check form outside of bank feeds we usually kind of memorize the last transaction so that it'll pull up the account number of the last transaction helping us to be consistent however this is another method you could use and that particular vendor you can assign the account that you want it to go to if you're using bank feeds I like the bank rules better because you could get more specific on the bank rules as to which account you want something to be assigned to because possibly if you order something from like a supply shop then maybe you want large purchases to be treated differently than small purchases possibly go into a fixed asset versus a supplies you can do that with the with the bank rules you can't really do that here okay so opening balances this is something that you would never use after you first set up the accounts it's the thing that we will use this time and this time only so QuickBooks will create a transaction most likely entering a bill form because the bill form is the form that increases accounts payable if you put something in here the other side most likely go into an expense account and so we'll see that so I'm gonna I'm gonna close this back out for now do you want to leave without saving I'm gonna say yes so there is that now if we were to upload a list of vendors which again I would take the opportunity to clean up your vendors I would not just download 500 vendors from my prior accounting system and then upload them all up here because then again you have all those vendors that you probably don't need I would either just upload the the ones that have a balance in them and then start new creating new vendors as I go as I enter expense forms and bill forms or I would look for only the vendors that had activity in them recently and clean out all the all the excess and pull them in or possibly just add the vendors that I really want a strong relationship with it has a lot of detail in them such as our suppliers just some things to think about but if I was to import them we can import this way so I can select this one we have our import screen now remember that in the end I'm gonna close that out the other way you can get there is to go to the to the cog up top tools and import data so I just want to point this out in case QuickBooks eliminates one of these two methods they just make a change you can have the vendors here but I think it makes sense to have it in the vendor center so let's check that out if I go back on over to the expenses and I go into the import here there it is first time importing vendors all your vendor information must be in one file the top row of your file must contain a header title for each column of information vendor name is the only required field so it says you can select either a CSV file or Excel file so this time they've expanded it again from what was in the products and services like they did with the customers having either an excel or CSV file CSV file being a comma deliminated file typically opened in excel but stripped of all the detail I would download their information just like we did with the customers if you're tip if you're looking to use this method and then open up your your data that you pulled that I would download your data from whatever your accounting system was to excel or some other spreadsheet which is typically easy to do and then copy over each of the columns here to the proper columns in the same fashion as we did with the customers same idea same concepts could be a problem in that you might have a situation where for example you have you have like a name with the first name space last name which the other system breaks out between two cells or you might have one system say it's last name comma first name and in this one they want first last and first last or something like that or you might run into a situation where like the whole address is is in one is in one cell street city zip state zip might be broken out differently we talked to a little bit about techniques to deal with that when we did the customer area so if you want some techniques to say well what if I need to combine this together in one cell we talked about this that when we said importing customers and what if I had it all in one cell and I wanted to break them out into multiple cells we talked about that a little bit in when we dealt with the same kind of issue with customers so you can look at that if you want to or you can look online and and see tricks to deal with whatever you're doing just say okay if if what I need to do is take this and break it out into two cells type into excel how do I break out uh uh first name last name into and type into your favorite search first name last name or possibly youtube into two cells or or something like or convert it to a comma kind of thing you get you'll get ideas about it all right but we're not going to do that here because we did that with the customer side and what we're going to do is imagine that that whole amount here uh 15 000 is coming from just one vendor and so I'm not going to import it again because we it's a similar process we'll as the customers and as the products and services so I'm just going to uh uh just set up a new vendor so I'm just going to add a vendor and we're just going to say I'm going to say the vendor name is just going to be epiphone epiphone is our vendor and that's all I'm going to put maybe I'll put that in the company name as well epiphone but this is the only required field and I'm going to go down here and just say all I need is that opening balance which I would only use when I first input the data I'm going to say what was it 15 000 uh 15 000 okay so 15 000 and the date is going to be 12 312 3 12 312 3 last date of the prior year and that's important because it's going to make a journal entry possibly and most likely with an expense form which will increase the accounts payable the other side go into an expense and that expense will roll into net income which will roll into the to the equity section so let's save it and check it out so there it is so if I close this out what happened it put epiphone in here so now I have epiphone as a vendor if I select the drop down says create bill create uh expense I can make a payment if I go into epiphone you can see what it did it made a bill form remember that a bill form by the way is is something different in common terms language than in quickbooks in common term language you might say that you bill your customers but a bill form in quickbooks means that the bill you're being billed by the vendor like the telephone company and not only that you didn't pay off the bill if you paid off their bill then what you would enter is not a bill you would enter an expense form or check form but if you entered their bill as a bill into the system you would be increasing the accounts payable so bill form for quickbooks is much more restrictive of a term it means that you're entering a a vendor invoice or bill that will increase the accounts payable right so bill increases accounts payable for quickbooks okay so if I go into that what did it do it made a bill for epiphone here's the date and then down here just dump the other side into other miscellaneous expense now if you wanted to go to equity itself like opening balance you could change this account to opening balance I don't care though that it went into an expense account because we entered it as of the prior year it will roll into equity in the current year and the income statement will refresh so that's fine I'm good with that I'm going to close that out and then I can see that I can also track that bill and the expenses over here which tracks the transactions and in the bills which tracks the transactions we have to be in the unpaid bills and the unpaid bills okay so there's that so now let's open up our reports and see what it did to the report so I'm going to I'm going to go down reports on the left hand side in our favorites let's right click on the balance sheet and open a new tab right click the profit and loss open in a new tab go into that middle tab that we just opened close up the hand boogie let's bring it back to 2020 301 oh one two three tap 1231 two three 1231 two three tab okay so accounts receivable we did that last time inventory we did that last time here's the ap at 15 000 that matches what we have here that looks good let's go into it see what it did if we go into it then of course we see that it made a bill we didn't enter a bill we just entered that opening balance it made a bill because the bill form is the form that increases accounts payable allowing us then to tie the bill to the payment that we expect to happen in the future where did it put the other side dumped it into net income the net income comes from the income statement let's go to the income statement close up the boogie and range change 010123 to 123123 and run it so now we have it just dumped it into this random account miscellaneous expense you might say well that's not what we bought we bought something else it should it should go into like telephone or whatever we bought or inventory but that's okay because it's in the prior year I don't care what it was prior year is closed the income statement is closed we already did our income taxes it's over that's fine all we need to have is the balance sheet to be correct generally going forward the income statement will reset if I need to go back to the income statement back to last year which is already closed then we can look at the prior accounting system if I go up to the next date here 010124 to 123124 the odometer resets for our new journey nothing's in it so that's what we want because that's fine so if I go to the balance sheet that also means that everything that's in net income is not even an account this isn't a real account it's going to close out to retained earnings let's check that out 010124 to 123124 run it closes out to retained earnings so the plan is in effect everything's getting dumped into retained earnings we will clean up retained earnings at the end of this process all I need to do is make all these balances work if I make all of these balances work then retained earnings will have the everything else will dump out and retained earnings will end up at this 77896 possibly in some strange accounts opening balance retained earnings have net income but will consolidate it all together to whatever we need it to be retained earnings or a capital accounts of the partnership or the sole proprietorship if it's a if it's a sole proprietor will do that after we get we get everything worked out so that looks like it works now obviously if I go back to this first tab just to remind us that if I go down to my expenses when I pay off the expenses when when I go to say the vendor here hold on let's just go into the bills something if I go in here and I say that we're going to pay them or let's just do it this way if I go to the plus button and I say I'm going to pay the bills then now I can pay it off so we can see that item in here notice if I entered it with a journal entry it would be difficult for me to go in here and tie it I probably still could do it but it wouldn't exactly it doesn't look exactly right right when because the bill is the form that ties out to the pay bill okay let's open up a sub ledger or the trial balance I'm going to or no we do we need a sub ledger let's go to the reports down here close up the hand boogie so we have some more space on the dance floor to boogie and then we're going to go down to who owes you so here's a sub ledger balance sheet vendor vendor accounts payable aging accounts payable aging and then vendor balance detail let's open that one right click and open a new link so just to note this is the sub ledger closing this one up here let's make it as a let's all dates is fine so there it is so we only have one person that we owe but just to note that the sub ledger should list all the vendors that we owe money to broken out by vendor 15,000 that should tie out to what's on the balance sheet the 15,000 now oftentimes we track that internally and what I would call the vendor center over here but the vendor center oftentimes doesn't give you that balance so people don't fully understand that the vendor center should tie out to what's on the sum of all the outstanding balances over here should tie out to what's on the balance sheet and you can see that clearly if you run a report for the sub ledger breaking out everything you owe by vendor all right let's open up the trial balance I'm going to open up the hand boogie again and we're going to well let's go to the first tab open up the hand boogie and let's go to the reports close up the hand boogie so we can boogie and then we're going to go down and the trial balance by the way is way at the bottom down here under the account let's just find it this way for right click on the trusty TB trial balance open link in a new tab and just check it out this way this is what we've constructed thus far closing up the hand boogie right back to 03010123 tab 123123 tab run it so we can be refreshed with a nice run a nice jog so there we have it so now we've we put the AR in there the inventory the accounts payable opening balance equity and then these two are income statement accounts so notify net those two out we can see because I'm into 23 that those two accounts will net out right 20500 minus the 15000 that's the 5500 if I go to the balance sheet and I bring this back to 03010123 tab 123123 tab and run that one that's what they put in here it's not in retained earnings yet they put another account net income not exactly proper but that's how most online accounting softwares work to try to show you that link it should be in retained earnings right but but they put it and then if I go over here and then I go back to the prior 010123 tab 123123 tab and run it to refresh it there's the difference they they dumps the AR other side of it with an invoice into 20500 income they dumped the other side of the ap expenses into expenses 15000 the difference is 5500 which is on the balance sheet 5500 the trial balance will show you the all of the balance sheet accounts down to here you can imagine this kind of being equivalent to net income before the current year and then it gives you the detail of the income statement including revenue and expenses the net of revenue and expenses if you subtract out revenue minus expenses being net income so that's how you can get this nice short short document that shows the balance sheet on top of the income statement what happens if I go one year up to the current year that we're going to start doing business on the balance sheet this net income is going to roll into retained earnings so I'm going to say 010124 123124 run it that the the net income rolled into retained earnings on the income statement it's going to all go away because we're resetting the odometer for the new trip so that we can count our progress from 010124 123124 boom nothing's in it that's what we want what if we go to the trial balance what's going to happen these two are going to go away and it's going to show retained earnings at 5500 it's just going to squish up all of the income statement accounts to that one number right so i'm going to go back up here and say 010124 123124 run it boom there's the 5500 still in balance that being in balance by the way is the double entry accounting system working which you can also represent in a formula basis although this is cleaner assets equal liabilities plus equity let's just check that out as we're going assets are 20 500 plus two eight nine six are 23 396 liabilities and equity who has claimed to those assets third party people have claim 15 000 like the bank or our vendors plus our claim as the owner two eight nine six plus five five five zero zero there's the 23 396 that's how it's being represented on the balance sheet so we have assets equal liabilities plus equity the other way you can represent this is of course assets minus liabilities so 20 500 plus two eight nine six are the assets minus the liability 15 000 comes out to the equity eight thousand three ninety six which is what these two add up to five five oh oh plus two eight nine six eight thousand three ninety six you can see that on the balance sheet if i look at this accounting equation and just say okay i'm going to look at these bottom two and just look at i'll just do the math my algebra i'm just going to say well if assets equal liabilities plus equity that means 23 396 assets minus liabilities 15 000 equals equity of eight three nine six so the balance sheet longer more cumbersome a lot of subtotals actually you know less easy to read and navigate through and the income statement then actually a trial balance in a lot of ways trial balance clean streamlined but most people don't understand debits and credits that's why you use the trial balance to do the work and then you convert it to a format that people can read the accounting equation but both the debits and credit format of the trial balance and the accounting equation format of the balance sheet and its component of retained earnings the income statement are reflections of the same concept of the double entry accounting system